I had the same thought.  Seems to me that all the guy inherited was an option.  What if he had sold it to someone else?  No tax on it, and the buyer's basis would be what he paid for the property plus what he paid for the option.  But does that matter?  

Suppose the decedent gave the beneficiary a $1 million house.  The basis would be $1 million.  What if the decedent gave the beneficiary a $1 million house, provided he pay $100,000 to the other beneficiaries?  Basis is still $1 million, I would say.  So in this case, decedent gave the beneficiary a $1 million house, provided he paid $750,000 to the other beneficiaries.  What did he inherit, really?